Saddam capture seen boosting shares

Tel Aviv shares, first out of the gate, rise 3%

SteveGelsi

NEW YORK (CBS.MW) - U.S. stocks are expected to rally Monday after news that former Iraqi dictator Saddam Hussein was captured in his hometown of Tikrit.

An armed former Iraqi leader Saddam Hussein was captured "like a rat" Saturday night, alive and without a fight, U.S. and Iraqi officials said Sunday. See full story.

The news comes at a key time for stocks, as they open their first week of trading above the 10,000 level in more than a year and a half. See full story.

In a first indication Sunday after the capture of the former Iraq leader, shares of Israeli equities traded on the Tel Aviv Stock Exchange rose about 3 percent in the afternoon session.

Stocks in Tel Aviv were active, and a total $228 million of shares changed hands. That's one of the busiest days in the exchange's history.

And, according to a Reuters report, the U.S. dollar rose one percent against euro and half a percent against yen in early trade in New Zealand.

George Friedman, director at seven-year-old intelligence gathering service Stratfor.com, has analyzed the Iraq war on topics from the political to the economic.

"The markets have been pretty sophisticated on Iraq. There does not appear to have been any Iraq war discount," Friedman, who operates a network of intelligence gatherers around the globe, told CBS MarketWatch's Thom Calandra Sunday. "There appears to have been a premium on some commodities but not much."

Adds Friedman, "Certainly on Monday the markets will perceive it has changed. I think this is what will drive the rally on Monday."

The Dow Jones Industrial Average
DJIA, -0.72%
finished out the week at 10,042, holding onto the 10,000 barrier for the second straight day. The Dow rose 180 points, or 1.8 percent, over its week-ago level of 9,862.

The Nasdaq
$COMPQ
wrapped up the last seven days at 1,949, up 12 points, or 0.6 percent from its week-ago level of 1,937.

The S&P 500
SPX, -0.71%
closed at 1,074, up 13 points, or 1.2 percent, from its week-ago level of 1,061.

Fund managers are jostling to wrap up their portfolios for the year, and the overall investing public is often in a buying mood around the holidays.

And, next Friday marks the last triple witching day of the year as index futures, index options and options on stocks all expire.

Mark Hulbert of the Hulbert Financial Digest pointed out that December ranks fourth behind July, August and January for the best performing month in the stock market, based on a survey of all monthly changes in the Dow Jones Industrial Average since 1896, when this benchmark was created.

Hulbert concludes that the stock market usually moves up between Dec. 24 and the first five trading days of January, but warns that the move is actually "part of a much broader seasonal tendency that often is referred to as the Seasonality Timing System." See full story.

Peter Cardillo of Global Partners Securities said he's looking for the Dow to possibly move up to near the 10,200 mark by the end of the year.

"The momentum is still for higher prices," he said. "The economic numbers continue to support a good market going forward, based on strong economic activity and growing corporate earnings."

He's looking for sector leadership from technology names into metals and other commodities.

It's also going to be a busy week for initial public offerings, with a $3 billion IPO from China Life
LFC, -0.58%
a $264 million debut from online travel firm Orbitz
ORBZ
plus seven other deals. See IPO Report.

Economic calendar

The consumer price index and the current account of the U.S. deficit are due Tuesday. See full story.

Economists are expecting a rise of 0.1 percent in the CPI on the heels of price increases in natural gas, fuel oil, agricultural and livestock commodities.

November housing starts of 1.91 million are also expected on Tuesday, as the real estate sector weighs in.

On Thursday, the Conference Board's index of leading indicators is expected to rise by 0.3 percent for November.

Economists at Goldman Sachs said Friday in a note to investors that they are "more optimistic about growth" with a rise of 4 percent seen in gross domestic product in the first half of 2004, followed by 3 percent in the second half.

Friday action

The major equity indexes rose Friday, rallying despite conflicting signals about the health of the economy.

Early gains followed news of an unexpected decline in producer prices, but the advance evaporated upon release of a disappointing measure of consumer confidence. See full story.

The Dow Jones Industrial Average
DJIA, -0.72%
gained 34 points, or 0.3 percent, to close at 10,042.16, while the Nasdaq Composite
$COMPQ
added almost 7 points, or 0.3 percent, to finish at 1,949.

"The path of least resistance seems to run to the upside in this market," said Art Hogan, chief markets analyst with Jefferies & Co.

Breadth within the Dow Friday was positive with 19 of the 30 components moving higher.

United Technologies was the top advancer, gaining 2.6 percent after the company affirmed its earnings expectations. The stock was among four in the Dow hitting 52-week highs in midday action. The other three were Coca-Cola, Honeywell, GM and Walt Disney.

The biggest decliner was AT&T, which lost 3.3 percent. SBC Communications fell 1 percent despite upping its dividend. Boeing, GE, which also boosted its payout to shareholders, J&J and Wal-Mart were also notably weak.

Check out other individual stocks making significant percentage increases or decreases in price in Movers and Shakers.

Volume totaled 1.21 billion on the New York Stock Exchange, and 1.45 billion on the Nasdaq. Breadth was positive in the broad market with advancers outpacing decliners, 21 to 12 on the Big Board, and 19 to 12 on the Nasdaq.

Bonds gain; gold benefits as dollar weakens

Treasury prices gained ground, pushing benchmark yields to three-week lows, following the economic data. See full story. The U.S. dollar saw mild losses versus its rivals as traders focused on the widening trade gap. See full story.

A spike in heating fuel prices lifted crude futures above $33 per barrel for the first time in a month. January crude climbed to a high of $33.20, a level the futures market hasn't seen since mid-November. See full story.

February gold closed at $410.10 an ounce, up $4.70 for the day and $2.80 for the week. See full story.

U.S. wholesale prices fell 0.3 percent in November, the first decline since May, the Labor Department reported Friday. The core producer price index for finished goods, which excludes volatile food and energy prices, fell 0.1 percent, the first decline since June.

Economists were looking for a gain of 0.1 percent in the November PPI, according to a survey conducted by CBS MarketWatch. The core rate was expected to be unchanged. See full story.

The U.S. trade deficit widened by 1.0 percent in October to $41.8 billion, the Commerce Department said. The trade deficit was slightly above the consensus forecast of Wall St. economists. See full story.

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